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Record Shipments Drive Worldwide Mobile Phone Market to 21.0% Growth, According to IDC

FRAMINGHAM, MA – OCTOBER 19, 2006 – The worldwide mobile phone market took another step towards reaching one billion units shipped for the year, with a total of 254.9 million units shipped in the third quarter of 2006. According to IDC's Worldwide Quarterly Mobile Phone Tracker, worldwide shipments of mobile phones were up 7.9% from the previous quarter and up an impressive 21.0% from the same quarter a year ago.

"The strong growth in the third quarter was very comparable to the growth we saw in 3Q05, as the trend of vendors and carriers working to prep for the holiday season begins," says Ryan Reith, research analyst with IDC's Worldwide Mobile Phone Tracker. "New models are appearing on shelves, carrier marketing campaigns are everywhere, and the buzz around stylish phones are driving consumer awareness towards new devices."

With 3Q06 earnings results in, we have seen record performances from all of the top 5 vendors in the industry. These high numbers in shipments in the third quarter have allowed IDC to keep their forecast for 2006 intact, with the aim to reach nearly a billion units shipped for the year.

"Shipping nearly a billion units in a single year is a significant milestone, but just as important is the journey it takes to get there," says Ramon Llamas, research analyst with IDC's Worldwide Mobile Phone Tracker. "Much focus has been given to emerging markets, and rightly so. Emerging markets have presented tremendous opportunity for vendors to provide users with their first handsets, and some users may already be looking to upgrade to another phone. Similarly, replacement handsets are a popular option for those in mature markets, especially as new features such as music have gained momentum."

With the holidays approaching, we are seeing consumer's shift their aspirations from slim handsets to the world of mobile music. The portfolio of handsets from each of the top 5 vendors is now outfitted with a signature device that is designed for consumers who want music on the go, and these models are now rapidly gaining the traction we anticipated .

"Handsets that provide music functionality are now very visible in the industry. Mature markets are at a point where it is worthwhile for the carriers to launch these devices with strong marketing campaigns behind them, knowing that consumers are willing and ready to use their device as a music player as well as a phone," says Reith.

3Q06 Vendor Highlights

— Nokia. The Finnish powerhouse once again exceeded expectations and set a new industry record by shipping 88.5 million units in the third quarter, surpassing their previous record by 4.8 million units. Double-digit sequential growth was evident in Europe, Asia/Pacific, and North America, with China being a key driver. The growth in China and Asia/Pacific underscores Nokia's emphasis on remaining the top seller in emerging markets. News usually surrounds Nokia's announcements of high-end devices, but the record number of shipments shows that Nokia continues to produce mass shipments of low-end devices equipped to suit the needs of those in emerging markets.

— Motorola. Expectations were set high for Motorola in the third quarter, and while some expectations were not met, it should not be overlooked that this was another record-setting quarter . The company continues to excel in 2006 with its sixth straight quarter of growth near 40% or better. Motorola also offered more news on the expansion of the RAZR family, with the launch of the new KRZR and announcements of the RAZR MAXX and the RIZR to follow soon. Continued success from the Q was also a driver of shipments for Motorola in the converged mobile device space.

— Samsung. Having spent the first half of the year approaching thirty million units shipped in a quarter, Samsung reached that milestone in 3Q06 and maintained a ten million units lead over the number four vendor, Sony Ericsson. The release of its 'Ultra-Edition' line, a series of slim and stylish devices, in Europe, along with shipment recovery in North America helped drive Samsung's performance in the quarter.

— Sony Ericsson. Celebrating its five year anniversary, the 50/50 venture reached a record shipment volume during the quarter. Having moved past LG Electronics for the number four position worldwide in 2Q06, the company extended its lead by more than three million units. In addition, the success of its mid- and high-priced devices, including its Cybershot-branded phones, helped lift ASPs higher than the previous quarter.

— LG Electronics. In addition to reaching a new shipment record this quarter, LG also posted a return to profitability after two quarters of losses. Despite these gains, LG fell further behind the other leading vendors this quarter. North America was the primary beneficiary of its shipments, accounting for nearly half of the company's total volumes thanks in large part to the success of its Chocolate phone. Similarly, the company made gains in Europe and Korea.

Note: Vendor shipments are branded shipments and exclude OEM sales for all vendors.

Mobile Phones – These small, battery-powered, voice-centric devices utilize operator-provided cellular/PCS air interfaces for voice communication. They are designed primarily, in both form factor and feature set, for a compelling mobile telephony experience, but may also include text-messaging capability. Mobile phones may include a headset jack for hands-free operation as well as a variety of features, such as personal information management, multimedia, games, or office applications. Mobile phones exist at all points along the form factor, price point, and feature set continua. Mobile phones that combine voice communications capabilities with pen or keypad handheld data features are tracked within the Converged Devices category.

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. Over 850 IDC analysts in 50 countries provide global, regional, and local expertise on technology and industry opportunities and trends. For more than 42 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com .

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